FIN-2018-A004 September 21 2018

Advisory on the FATF-Identified Jurisdictions with AMLCFT Deficiencies

On June 29 2018 the Financial Action Task Force (FATF) updated its list of jurisdictions with strategic anti-money laundering and combatting the financing of terrorism (AML CFT) deficiencies The changes may affect US financial institutionsrsquo obligations and risk-based approaches with respect to relevant jurisdictions

As part of the FATFrsquos listing and monitoring process to ensure compliance with its international AMLCFT standards the FATF identifies certain jurisdictions as having strategic deficiencies intheir AMLCFT regimes1 These jurisdictions are named in two documents (1) the ldquoFATF Public Statementrdquo which identifies jurisdictions that are subject to the FATFrsquos call for countermeasuresandor are subject to enhanced due diligence (EDD) due to their strategic AMLCFT deficienciesand (2) ldquoImproving Global AMLCFT Compliance On-going Processrdquo which identifiesjurisdictions that the FATF has determined to have strategic AMLCFT deficiencies2 On June 292018 the FATF updated both documents with the concurrence of the United States Financialinstitutions should consider these changes when reviewing their obligations and risk-basedpolicies procedures and practices with respect to the jurisdictions noted below3

FATF ldquoPublic Statementrdquo

bull Democratic Peoplersquos Republic of Korea (DPRK) and Iran

FATF ldquoImproving Global AMLCFT Compliance On-going Processrdquo

bull Remaining on list Ethiopia Serbia Sri Lanka Syria Trinidad and Tobago Tunisia Yemen

bull Added to list Pakistan

bull Removed from list Iraq Vanuatu

1 The FATF (wwwfatf-gafiorg) is a 37-member intergovernmental body that establishes international standards to combat money laundering and counter the financing of terrorism and proliferation of weapons of mass destruction The United States is a member of the FATF

2 The FATF public identification of countries with strategic AMLCFT deficiencies is in response to the G-20 leadersrsquo call for the FATF to reinvigorate its process for assessing countriesrsquo compliance with international AMLCFT standards The G-20 leaders have consistently called for the FATF to issue regular updates on jurisdictions with strategic deficiencies Specifically within the FATF the International Cooperation Review Group (ICRG) monitors and identifies countries with AMLCFT deficiencies For more information on the ICRG procedures please visit the FATFrsquos website

3 See 31 USC sectsect 5318(h) and (i)

1

F I N C E N A D V I S O R Y

I Jurisdictions that are subject to the FATFrsquos call for countermeasures andor are subject to EDD due to their strategic AMLCFT deficiencies

The FATF has stated that the following jurisdictions have strategic deficiencies in their AMLCFTregimes and has called upon its members and urged all jurisdictions to (1) impose countermeasuresandor (2) apply enhanced due diligence proportionate to the risks arising from the jurisdiction

Please click on each jurisdiction for additional information

A Countermeasures

Democratic Peoplersquos Republic of Korea (DPRK)

B Enhanced Due Diligence

Iran

Review of Guidance Regarding the DPRK and Iran

Democratic Peoplersquos Republic of Korea (DPRK)

The FATF calls on its members and other countries to apply countermeasures against the DPRK to protect the international financial system from money laundering and terrorist financing risks The FATF Public Statement on the DPRK emphasizes the high risk of proliferation financing attributable to the DPRK consistent with UN Security Council Resolutions (UNSCRs)4 In particular the FATF reaffirmed its call that jurisdictions terminate correspondent relationships with DPRK banks which is required by UNSCR 2270 Financial institutions should be acutely aware of the financial provisions and comprehensive prohibitions contained in the UNSCRs imposing sanctions on the DPRK

Among other prohibitions and restrictions UNSCR 2321 adopted in 2016 states that member states shall expel individuals acting on behalf of or at the direction of a bank or financial institution of the DPRK UNSCR 2321 also expresses concern that individuals from the DPRK are sent abroad to earn hard currency to fund the DPRKrsquos nuclear and ballistic missile programs and also reiterates the concern that the DPRK may use bulk cash to evade UN measures UNSCR 2321 instructed member states to close existing representative offices subsidiaries or banking accounts in the DPRK within 90 days of the adoption of the resolution (unless individually exempted by the 1718 Committee) and stated that member states shall prohibit public and private financial support within their territories or by persons or entities subject to their jurisdiction for trade with the DPRK

4 Relevant UNSCRs include 2397 (December 2017) 2375 (September 2017) 2371 (August 2017) 2356 (June 2017) 2321(November 2016) 2270 (March 2016) 2094 (March 2013) 2087 (January 2013) 1874 (June 2009) and 1718 (October 2006) See the UN Security Council Resolutions webpage for more information

2

F I N C E N A D V I S O R Y

In addition to UN sanctions the US Department of the Treasuryrsquos Office of Foreign AssetsControl (OFAC) maintains a robust sanctions program on North Korea through the North KoreaSanctions Regulations which implements DPRK-related Executive Orders (EO) 13466 1355113570 13687 13722 and 13810 the North Korea Sanctions and Policy Enhancement Act of 2016and relevant provisions of the Countering Americarsquos Adversaries Through Sanctions Act of 20175

Separately under Non-Proliferation Sanctions such as Weapons of Mass Destruction ProliferatorsSanctions Regulations6 as well as under EO 13382 OFAC administers sanctions on individualsand entities responsible for the proliferation of weapons of mass destruction (WMD) as well astheir supporters some of whom are North Korean or tied to North Korea and North Korean-relatedactivity7 Collectively these authorities prohibit US persons including US financial institutionsfrom engaging in nearly all transactions involving the DPRK8 These sanctions are a direct response to the DPRKrsquos ongoing development of WMD and their means of delivery the launchingof intercontinental ballistic missiles nuclear tests human rights abuses and censorship destructivecoercive cyber-related actions involvement in money laundering the counterfeiting of goods andcurrency bulk cash smuggling and narcotics trafficking in continued violation of the UNSCRs9

US financial institutions should be particularly aware of the extensive nature of the sanctionsassociated with EO 13810 (September 2017)10 The EO provides the Secretary of the Treasuryin consultation with the Secretary of State additional tools to disrupt a broad range of DPRK-related activity to include North Korearsquos ability to fund its WMDs and ballistic missile programsSpecifically EO 13810 (1) establishes several new designation criteria (2) prohibits vessels and

5 See US Department of the Treasuryrsquos Resource Center for North Korea Sanctions 22 USC sect 9201 et seq and Public Law 115-44

6 See 31 CFR Part 5447 See Executive Order 13382mdashBlocking Property of Weapons of Mass Destruction Proliferators and Their Supporters8 Further information about these sanctions is available on OFACrsquos Resource Center for DPRK Sanctions and the

OFAC Recent Actions web page OFACrsquos sanctions prohibit US persons including US financial institutions from engaging in most transactions involving the DPRK the Government of North Korea and the Korean Workersrsquo Party OFAC recently took a series of sanctions actions related to the DPRK including actions pursuant to Execuitive Orders 13722 and 13810 on September 13 2018 and on September 6 2018 actions pursuant to Executive Order 13810 OFAC also took sanctions actions related to DPRK on August 21 2018 and August 15 2018 as well as additional sanctions actions on August 3 2018 pursuant to Executive Orders 13687 13382 and 13722 OFAC previously took sanctions actions related to the DPRK pursuant to Executive Orders 13810 and 13722 on February 23 2018 OFAC also issued DPRK-related sanctions pursuant to Executive Orders 13687 13722 and 13810 on January 24 2017 OFAC took other DPRK-related sanctions actions pursuant to Executive Orders 13810 and 13722 on November 21 2017 OFAC imposed other DPRK-related actions pursuant to Executive Orders 13687 and 13722 on October 26 2017 Executive Order 13810 on September 26 2017 and Executive Orders 13382 and 13722 on August 22 2017 OFAC took other DPRK-related sanctions pursuant to one or more of these same authorities on December 26 2017 June 29 2017 June 1 2017 March 31 2017 December 2 2016 and September 26 2016 On November 20 2017 the United States designated the DPRK a state sponsor of terrorism

9 See Executive Orders 13810 (September 20 2017) 13687 (January 2 2015) and 13551 (August 30 2010)10 See US Department of the Treasuryrsquos Resource Center for September 21 2017 actions relating to North Korea and

Remarks by Secretary Mnuchin on President Trumprsquos Executive Order on North Korea

3

F I N C E N A D V I S O R Y

aircraft that have called or landed at a port or place in North Korea in the previous 180 days andvessels that engaged in a ship-to-ship transfer with such a vessel in the previous 180 days fromentering the United States (3) provides authority to block any funds transiting accounts withlinks to North Korea that come within the United States or in the possession of a United Statesperson and (4) provides authority to impose sanctions on a foreign financial institution (FFI) thatknowingly conducts or facilitates on or after September 21 2017 (i) any significant transaction onbehalf of person blocked under the DPRK-related EOs or persons blocked under EO 13382 forNorth Korea-related activities or (ii) any significant transaction in connection with trade with NorthKorea The sanctions applicable to FFIs can be restrictions on correspondent or payable-throughaccounts or full blocking sanctions11

Since the issuance of EO 13810 OFAC has designated entities and individuals involved in NorthKorearsquos illicit shipping and transportation activities trading companies and financial and bankingrepresentatives and identified multiple vessels as blocked property12 On July 23 2018 OFACissued a joint advisory13 with the US Department of State and the US Department of HomelandSecurity to alert all US persons to the sanctions evasion tactics used by North Korea that couldexpose businesses ndash including manufacturers buyers and service providers ndash to supply chainsanctions compliance risks under US or United Nations sanctions authorities Earlier on February23 2018 with the US Department of State and the US Coast Guard OFAC issued a North KoreaSanctions Advisory on sanctions risks related to North Korearsquos shipping practices to alert personsglobally of North Korearsquos deceptive shipping practices to evade US and UN sanctions14

Other Treasury actions underscore the serious risks that any financial activity involving the DPRK may facilitate WMD and ballistic missile activities On November 9 2016 the Financial Crimes Enforcement Network (FinCEN) issued a final rule effective December 9 2016 imposing the fifth special measure against the DPRK consistent with the FinCENrsquos finding that the DPRK is a jurisdiction of ldquoprimary money laundering concernrdquo under Section 311 of the USA PATRIOT Act15

The fifth special measure codified at 31 USC 5318A(b)(5) allows FinCEN to prohibit or impose conditions on the opening or maintaining of correspondent or payable-through accounts for the identified jurisdiction by US financial institutions The notice of finding and the final rule stressed that the North Korean government continues to use state-controlled financial institutions and front companies to conduct surreptitiously illicit international financial transactions some of which support the proliferation of WMD and the development of ballistic missiles The final rule prohibits covered financial institutions from opening or maintaining in the US correspondent accounts for or

11 See OFACrsquos FAQs 12 See Executive Order 13810 (September 20 2017)13 See US Department of the Treasuryrsquos Resource Center 14 See US Department of the Treasuryrsquos Press Release Treasury Announces Largest North Korean Sanctions Package

Targeting 56 Shipping and Trading Companies and Vessels to Further Isolate Rogue Regime15 See US Department of the Treasuryrsquos Resource Center and 81 FR 78715 (November 9 2016) FinCEN issued the

notice of finding and notice of proposed rulemaking (NPRM) on June 2 2016 (81 FR 35441) and June 3 2016 (81 FR 35665)

4

F I N C E N A D V I S O R Y

on behalf of North Korean banking institutions and requires covered financial institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against the use of such accounts to process transactions involving North Korean financial institutions

On November 2 2017 FinCEN issued a final rule effective December 8 2017 under Section 311of the USA PATRIOT Act that severed the Bank of Dandong a Chinese bank that has acted as aconduit for illicit North Korean financial activity from the US financial system The final rulestressed that the Bank of Dandong has acted as a conduit for North Korea to access the US andinternational financial systems including the facilitation of millions of dollars of transactions forcompanies involved in North Korearsquos WMD and ballistic missile programs

The Bank of Dandong has also facilitated financial activity for North Korean entities designated bythe United States and listed by the UN for proliferation of WMDs as well as for front companiesacting on their behalf The final rule a) prohibits covered financial institutions from opening ormaintaining in the United States correspondent accounts for or on behalf of the Bank of Dandongb) requires covered financial institutions to take reasonable steps not to process a transaction forthe correspondent account of a foreign bank in the United States if such a transaction involvesthe Bank of Dandong and c) requires covered financial institutions to apply special due diligenceto their foreign correspondent accounts that is reasonably designed to guard against their use toprocess transactions involving Bank of Dandong16

FinCEN also issued an advisory in tandem with the Bank of Dandong Section 311 Final Rule tofurther alert financial institutions to schemes commonly used by North Korea to evade US andUN sanctions launder funds and finance the North Korean regimersquos weapons programs17

Iran

The FATF continues to call upon its members and all jurisdictions to apply enhanced duediligence measures to protect against the terrorist financing risk emanating from Iran and thethreat this risk poses to the international financial system In addition to keeping Iran on itsPublic Statement during its June 2018 Plenary the FATF expressed disappointment ldquowith Iranrsquosfailure to implement its action plan to address its significant AMLCFT deficienciesrdquo as Iranhas not addressed nine out of 10 requirements in its AMLCFT action plan18 The FATF again

16 See US Department of the Treasuryrsquos Press Release FinCEN Further Restricts North Korearsquos Access to the US Financial System and Warns US Financial Institutions of North Korean Schemes Press Release Treasury Finalizes Action to Further Restrict North Korearsquos Access to the US Financial System and FinCENrsquos Imposition of Special Measure against Bank of Dandong as a Financial Institution of Primary Money Laundering Concern 82 FR 51758(November 8 2017)

17 See FinCEN Advisory FIN-2017-A008 ldquoAdvisory on North Korearsquos Use of the International Financial Systemrdquo (November 2017) In addition FinCEN has three other advisories relating to the DPRK FIN-2013-A005 ldquoUpdate on the Continuing Illicit Finance Threat Emanating from North Koreardquo (July 2013) FIN-2009-A002 ldquoNorth Korea Government Agenciesrsquo and Front Companiesrsquo Involvement in Illicit Financial Activitiesrdquo (June 2018) and FinCEN Advisory ndash Issue 40 ldquoGuidance to Financial Institutions on the Provisions of Banking Services to North Korean Government Agencies and Associated Front Companies Engaged in Illicit Activitiesrdquo (December 2005)

18 See FATFrsquos June 2018 Public Statement

5

F I N C E N A D V I S O R Y

highlighted these major deficiencies in Iranrsquos AMLCFT regime and noted that Iran ldquoshouldfully address its remaining action items including by (1) adequately criminalising terroristfinancing including by removing the exemption for designated groups lsquoattempting to endforeign occupation colonialism and racismrsquo (2) identifying and freezing terrorist assets in linewith the relevant United Nations Security Council resolutions (3) ensuring an adequate andenforceable customer due diligence regime (4) ensuring the full independence of the FinancialIntelligence Unit and requiring the submission of STRs [Suspicious Transaction Reports] forattempted transactions (5) demonstrating how authorities are identifying and sanctioningunlicensed moneyvalue transfer service providers (6) ratifying and implementing the Palermoand TF [Terrorist Financing] Conventions and clarifying the capability to provide mutual legalassistance (7) ensuring that financial institutions verify that wire transfers contain completeoriginator and beneficiary information (8) establishing a broader range of penalties for violationsof the ML [Money Laundering] offense and (9) ensuring adequate legislation and procedures toprovide for confiscation of property of corresponding valuerdquo19

The FATF reiterated its continued concern with the terrorist financing risk emanating from Iran andcalled upon its members and urged all jurisdictions to continue to advise their financial institutionsto apply enhanced due diligence measures to business relationships and transactions with naturaland legal persons from Iran The FATF will decide upon further action in October 2018 if Iranhas not enacted the necessary amendments to its AML and CFT laws and ratified the TerroristFinancing and Palermo Conventions

Treasury has consistently underscored the risks of conducting business with entities associated with Iran20 Iran continues to use deceptive tactics including front and shell companies to exploit markets in numerous countries to fund its nefarious activities Iranrsquos tactics include forging documents obfuscating data and hiding illicit activities under official cover of government entities among many others For instance Treasury sanctioned high-level officials of the Central Bank of Iran (CBI) including the CBI Governor at the time for collaborating with the Islamic Revolutionary Guard Corps - Qods Force (IRGC-QF) to conceal the movement of millions of dollars to fund Hizballah In addition Treasury targeted a currency exchange network that Iran was using in Iran and the United Arab Emirates to procure and move millions of dollars to the IRGC-QF which the CBI also enabled To combat Iranrsquos malign activities including its efforts to deceive the international business community since February 2017 OFAC has designated 146 Iran-related persons in 18 rounds of

19 Ibid 20 In addition to OFAC sanctions FinCEN has issued numerous advisories related to Iran see FinCEN Advisory

FIN-2018-A002 ldquoAdvisory on the FATF-Identified Jurisdictions with AMLCFT Deficienciesrdquo (April 2018) FinCEN Advisory FIN-2010-A008 ldquoUpdate on the Continuing Illicit Finance Threat Emanating from Iranrdquo (June 2010) FinCEN Advisory FIN-2008-A002 ldquoGuidance to Financial Institutions on the Continuing Money Laundering Threat Involving Illicit Iranian Activityrdquo (March 2008) and FinCEN Advisory FIN-2007-A001 ldquoGuidance to Financial Institutions on the Increasing Money Laundering Threat Involving Illicit Iranian Activityrdquo (October 2007)

6

F I N C E N A D V I S O R Y

sanctions for Iranrsquos support for terrorism WMD proliferation cyberattacks transnational criminal activity censorship and human rights abuses21 Additionally financial institutions should be familiar with the requirements and prohibitions contained in UNSCR 2231 related to Iran22

The continued suspension of countermeasures against Iran keeps Iran on the FATF PublicStatement This action does not remove or alter any obligation of US persons including financialinstitutions regarding a broad range of restrictions and prohibitions on engaging in transactions with or involving Iran given the large number of illicit finance risks associated with Iran includingmoney laundering terrorist financing human rights abuses and the financing of Iranrsquos ballisticmissile program

Review of Guidance on Section 312 Obligations Relating to the DPRK and Iran

Financial institutions must comply with the extensive US restrictions and prohibitions againstopening or maintaining any correspondent accounts directly or indirectly with foreign bankslicensed by the DPRK or Iran

In the case of DPRK existing US sanctions and the FinCEN December 2016 final rule imposingthe fifth special measure against the DPRK already prohibit any such correspondent accountrelationships superseding the Section 312 obligations

In the case of Iran the Government of Iran and Iranian financial institutions remain personswhose property and interests in property are blocked under EO 13599 and section 560211of the Iranian Transactions and Sanctions Regulations US financial institutions and otherUS persons continue to be broadly prohibited under the Iranian Transactions and SanctionsRegulations from engaging in transactions or dealings with Iran the Government of Iran andIranian financial institutions including opening or maintaining correspondent accounts forIranian financial institutions these sanctions impose obligations on US persons that go beyondthe obligations imposed under Section 312

21 On August 6 2018 EO 13846 reimposed certain sanctions with respect to Iran This EO supports the UnitedStatesrsquo withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and the initial 90-day wind-down periodThe 180-day wind-down period will end on November 4 2018 Consult OFACrsquos FAQ concerning EO 13846 and the reimposition of sanctions that occurred by August 6 2018 In addition to sanctions reimposed by EO 13846OFAC issued Iran-related designations on September 14 2018 July 9 2018 May 30 2018 May 24 2018 May 22 2018 May 17 2018 May 15 2018 May 10 2018 March 23 2018 January 12 2018 January 4 2018 November 20 2017 and October 13 2017 Furthermore OFAC previously issued Iran-related designationsassociated with Iranrsquos ballistic missile program on July 28 2017 July 18 2017 (in conjunction with those issuedby the US Department of State and in coordination with the US Department of Justicersquos release of informationinvolving a related criminal enforcement action) September 14 2017 May 17 2017 April 13 2017 and February3 2017 Consult OFACrsquos Iran Sanctions web page and the OFAC Recent Actions web page for more detailed information about the sanctions included in this footnote

22 UNSCR 2231 (July 2015) revises UN sanctions and other prohibitions including financial prohibitions concerning Iran the UN maintains a list of individuals and entities subject to targeted financial sanctions

7

F I N C E N A D V I S O R Y

Reminder of General 312 Obligations

As a general matter FinCEN reminds US financial institutions of their duty to apply enhanceddue diligence when maintaining correspondent accounts for foreign banks operating undera banking license issued by a country (1) designated as non-cooperative with respect tointernational anti-money laundering principles or procedures by an intergovernmentalgroup or organization of which the United States is a member and with which designationthe US representative to the group or organization concurs or (2) that has been designatedas warranting special measures under Section 31123 The regulations implementing the BankSecrecy Act as amended by the USA PATRIOT Act requires covered financial institutionsensure that their enhanced due diligence programs include at a minimum steps to

bull Conduct enhanced scrutiny of correspondent accounts to guard against money launderingand to identify and report any suspicious transactions in accordance with applicable law andregulation

bull Determine whether the foreign bank for which the correspondent account is established ormaintained in turn maintains correspondent accounts for other foreign banks that use theforeign correspondent account established or maintained by the covered financial institutionand if so take reasonable steps to obtain information relevant to assess and mitigate moneylaundering risks associated with the foreign bankrsquos correspondent accounts for other foreignbanks including as appropriate the identity of those foreign banks and

bull Determine for any correspondent account established or maintained for a foreign bankwhose shares are not publicly traded the identity of each owner of the foreign bank and thenature and extent of each ownerrsquos ownership interest24

II Jurisdictions identified by the FATF as having strategic AMLCFT deficiencies

The FATF publicly identifies jurisdictions with strategic AMLCFT regime deficiencies for whichthe jurisdictions have developed an action plan with the FATF Consequently these jurisdictionsare included in the following list of jurisdictions with strategic AMLCFT deficiencies as describedin the FATFrsquos ldquoImproving Global AMLCFT Compliance On-going Processrdquo

Please click on each jurisdiction for additional information

Ethiopia Pakistan Serbia Sri Lanka Syria Trinidad and Tobago Tunisia and Yemen

23 See 31 USC sect 5318(i) 31 CFR sectsect 1010610(b) and (c) (Enhanced Due Diligence obligations for correspondent accounts established maintained administered or managed in the United States for certain foreign banks)

24 Ibid

8

F I N C E N A D V I S O R Y

Summary of Changes to this List

Countries Removed from the List

bull Iraq is no longer subject to the FATFrsquos monitoring process under its ongoing global AMLCFTcompliance process The FATF welcomes Iraqrsquos significant progress in improving its AMLCFT regime and notes that Iraq has established the legal and regulatory framework to meetthe commitments in its action plan regarding the strategic deficiencies that the FATF identifiedin October 2013 Iraq will work with Middle East and North Africa FATF (MENAFATF) toimprove further its AMLCFT regime

bull Vanuatu is no longer subject to the FATFrsquos monitoring process under its ongoing global AMLCFT compliance process The FATF welcomes Vanuatursquos significant progress in improving itsAMLCFT regime and notes that Vanuatu has established the legal and regulatory frameworkto meet the commitments in its action plan regarding the strategic deficiencies that theFATF identified in February 2016 Vanuatu will work with the Asia Pacific Group on MoneyLaundering (APG) to improve further its AMLCFT regime

Countries Added to the List

bull Pakistan has been added to the list25 and will undergo monitoring by FATFrsquos International Co-operation Review Group (ICRG) based on the specific AMLCFT deficiencies highlighted by the FATF Pakistan made a commitment to work with the FATF and APG to strengthen its AMLCFT regime and to address its strategic counter-terrorist financing-related deficiencies ldquoincluding by (1) demonstrating that TF risks are properly identified assessed and that supervision is applied on a risk-sensitive basis (2) demonstrating that remedial actions and sanctions are applied in cases of AMLCFT violations and that these actions have an effect on AMLCFT compliance by financial institutions (3) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS) (4) demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for TF (5) improving inter-agency coordination including between provincial and federal authorities on combating TF risks (6) demonstrating that law enforcement agencies are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities and persons and entities acting on behalf or at the direction of the designated person or entities (7) demonstrating that TF prosecutions result in effective proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary (8) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf including preventing the raising and moving of funds

25 See ldquoImproving Global AMLCFT Compliance On-going Process - 29 June 2018rdquo

9

F I N C E N A D V I S O R Y

identifying and freezing assets (movable and immovable) and prohibiting access to funds and financial services (9) demonstrating enforcement against TFS [Targeted Financial Sanctions] violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases and (10) demonstrating that facilities and services owned or controlled by designated persons are deprived of their resources and the usage of the resourcesrdquo26

Review of Guidance Regarding Jurisdictions Having Strategic AMLCFT deficiencies

US financial institutions also should consider the risks associated with the AMLCFTdeficiencies of the countries identified under this section (Ethiopia Pakistan Serbia Sri Lanka Syria Trinidad and Tobago Tunisia and Yemen)27 With respect to these jurisdictions USfinancial institutions are reminded of their obligations to comply with the due diligenceobligations for FFIs under 31 CFR sect 1010610(a) in addition to their general obligations under 31USC sect 5318(h) and its implementing regulations28 As required under 31 CFR sect 1010610(a)covered financial institutions should ensure that their due diligence programs which addresscorrespondent accounts maintained for FFIs include appropriate specific risk-based andwhere necessary enhanced policies procedures and controls that are reasonably designedto detect and report known or suspected money laundering activity conducted through orinvolving any correspondent account established maintained administered or managed inthe United States Such reasonable steps should not however put into question a financialinstitutionrsquos ability to maintain or otherwise continue appropriate relationships with customersor other financial institutions and should not be used as the basis to engage in wholesaleor indiscriminate de-risking of any class of customers or financial institutions FinCEN alsoreminds financial institutions of previous interagency guidance on providing services to foreignembassies consulates and missions29

26 Ibid 27 This Advisory updates previous FATF-related guidance on identified jurisdictions with AMLCFT deficiencies

Additional FinCEN guidance on Syria includes FIN-2013-A002 and FIN-2011-A010 as well as FinCENrsquos guidance on the Commercial Bank of Syria see FIN-2011-A013

28 See generally 31 CFR sect 1010210 Anti-money laundering programs Specific AML Program obligations are prescribed in 31 CFR sectsect 1020210 (Banks) 1021210 (Casinos and Card Clubs) 1022210 (Money Services Businesses) 1023210 (Brokers or Dealers in Securities) 1024210 (Mutual Funds) 1025210 (Insurance Companies) 1026210 (Futures Commission Merchants and Introducing Brokers in Commodities) 1027210 (Dealers in Precious Metals Precious Stones or Jewels) 1028210 (Operators of Credit Card Systems) 1029210 (Loan or Finance Companies) and 1030210 (Housing Government Sponsored Enterprises)

29 See Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation Financial Crimes Enforcement Network National Credit Union Administration Office of the Comptroller of the Currency and Office of Thrift Supervision ldquoInteragency Advisory Guidance on Accepting Accounts from Foreign Embassies Consulates and Missionsrdquo March 24 2011 and Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation Financial Crimes Enforcement Network National Credit Union Administration Office of the Comptroller of the Currency and Office of Thrift Supervision ldquoInteragency Advisory Guidance on Accepting Accounts from Foreign Governments Foreign Embassies and Foreign Political Figuresrdquo June 15 2004

10

F I N C E N A D V I S O R Y

Review of General Guidance

AML Program Risk Assessment For the jurisdictions that were removed from the FATF listingand monitoring process (Iraq and Vanuatu) financial institutions should take the FATFrsquosdecisions and the reasons behind the delisting into consideration when assessing risk consistentwith their obligations under 31 CFR sectsect 1010610(a) and 101021030

Suspicious Activity Reports (SARs) If a financial institution knows suspects or has reason tosuspect that a transaction involves funds derived from illegal activity or that a customer hasotherwise engaged in activities indicative of money laundering terrorist financing or otherviolation of federal law or regulation the financial institution must file a SAR31

SAR Filing Instructions

When filing a SAR financial institutions should provide all pertinent available information inthe SAR form and narrative FinCEN further requests that financial institutions reference thisadvisory in the SAR narrative and in SAR field 35(z) (Other Suspicious Activity-Other) byincluding the following key term

ldquoJune 2018 FATF FIN-2018-A004rdquo

to indicate a connection between the suspicious activity being reported and the countries andactivities highlighted in this advisory

SAR reporting in conjunction with effective implementation of due diligence requirementsand OFAC obligations by financial institutions has been crucial to identifying proliferationfinancing as well as money laundering and terrorist financing SAR reporting is consistentlybeneficial and critical to FinCEN and US law enforcement analytical and investigative effortsOFAC designation efforts and the overall security and stability of the US financial system32

30 Supra note 1731 See 31 CFR sectsect 1020320 1021320 1022320 1023320 1024320 1025320 1026320 1029320 and 103032032 For example case studies see SAR Activity Review Issue 19 beginning on page 25 and Law Enforcement Case

Examples

11

F I N C E N A D V I S O R Y

For Further Information

Additional questions or comments regarding the contents of this Advisory should be addressedto the FinCEN Resource Center at FRCfincengov Financial institutions wanting to report suspicious transactions that may relate to terrorist activity should call the Financial Institutions Toll-Free Hotline at (866) 556-3974 (7 days a week 24 hours a day) The purpose of the hotline is to expedite the delivery of this information to law enforcement Financial institutions shouldimmediately report any imminent threat to local-area law enforcement officials

FinCENrsquos mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection analysis and dissemination of financial intelligence and strategic use of financial authorities

12